Skip to main content

The Canadian dollar weakened to a near two-week low against the greenback on Wednesday as expectations rose that the Bank of Canada would cut interest rates after the central bank expressed greater concern about global trade uncertainty.

Canada’s central bank held interest rates steady at 1.75 per cent as expected but left the door open to a possible cut over the coming months to help the economy weather the damaging effects of global trade conflicts.

“The loonie has sold off post-statement due to the fact that the BoC is beginning to witness the effects of external headwinds on the Canadian economy,” said Simon Harvey, FX market analyst for Monex Europe and Monex Canada.

Story continues below advertisement

The central bank’s “dovish stance” raises expectations for policy easing, “especially if the economic data and external climate deteriorates further,” Harvey said.

Money markets moved to fully price in a rate cut as early as July. Before the announcement, chances of a cut next year were seen at less than 50 per cent.

At 4:51 p.m. (2051 GMT), the Canadian dollar was trading 0.5 per cent lower at 1.3158 to the greenback, or 76.00 U.S. cents. The currency touched its weakest intraday level since Oct. 17 at 1.3210.

The U.S. dollar fell against a basket of major currencies after the Federal Reserve eased for the third time since July but signaled no more reductions ahead.

The Fed’s latest cut lowered the range for its policy rate to below the Bank of Canada’s equivalent rate for the first time since December 2016.

U.S. crude oil futures settled 0.9 per cent lower at $55.06 a barrel after a steep U.S. crude inventory build added to worries about a possible delay in resolving the U.S.-China trade war, which has hurt global oil demand.

Canadian government bond prices were higher across the yield curve, with the two-year up 29 Canadian cents to yield 1.558 per cent and the 10-year rising 138 Canadian cents to yield 1.452 per cent.

Story continues below advertisement

On Monday, the 10-year yield touched its highest intraday level since July 16 at 1.628 per cent.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies